McDermott International, Inc. (NYSE: MDR) (“McDermott” or the
“Company”) today reported income from continuing operations of
$52.7 million, or $0.22 per diluted share, for the 2012 second
quarter. The results of the 2012 second quarter compare to income
from continuing operations of $63.7 million, or $0.27 per diluted
share, in the corresponding period of 2011. Classified as
discontinued operations, the results of McDermott’s former charter
fleet business, which was sold in March 2012, are excluded from the
periods presented. Weighted average common shares outstanding on a
fully diluted basis were approximately 237.5 million in the
quarters ended June 30, 2012 and June 30, 2011.
McDermott’s revenues were $889.2 million for the 2012 second
quarter compared to $849.8 million in the corresponding period of
2011. The year-over-year increase was attributable to the Middle
East and Atlantic segments, primarily due to increased fabrication
and marine activity. The increase from these segments was partially
offset by lower revenues in the Asia Pacific segment due to lower
marine activity.
The Company’s operating income in the 2012 second quarter was
$79.4 million compared to $83.8 million in the 2011 second quarter.
Increased operating income in the Middle East segment and improved
results in the Atlantic segment were more than offset by the
decline in the Asia Pacific segment, attributable to lower marine
activity.
“We are pleased with the results of our 2012 second quarter
which keeps us on pace for the year,” said Stephen M. Johnson,
Chairman of the Board, President and Chief Executive Officer of
McDermott. “Both the Middle East and Asia Pacific segments reported
solid operating results in the 2012 second quarter, with each
providing over $46 million in operating income. As anticipated, the
Atlantic segment reported an operating loss; however, its 2012
second quarter level was an improvement as compared to the 2011
second quarter. McDermott is in a solid financial position, with a
strong balance sheet and a solid backlog of work, and we believe
our growth strategy is well designed for the markets we serve.”
The Company’s other income for the second quarter of 2012 was
$2.9 million, which represents an improvement of $1.6 million as
compared to other income of $1.3 million in the second quarter of
2011 primarily attributable to increased interest income.
At June 30, 2012, the Company’s backlog was approximately $5.7
billion, compared to $5.8 billion and $4.7 billion at March 31,
2012 and June 30, 2011, respectively.
Balance Sheet Summary
As of June 30, 2012, McDermott reported total assets of
approximately $3.2 billion. Included in this amount was $748.7
million of cash and cash equivalents, restricted cash and
investments. Net working capital, calculated as current assets less
current liabilities, was $611.5 million. Additionally, total equity
was over $1.8 billion, or approximately 57% of total assets, with
total debt of $109.8 million.
OTHER INFORMATION
About the Company
McDermott is a leading engineering, procurement, construction
and installation (“EPCI”) company focused on executing complex
offshore oil and gas projects worldwide. Providing fully integrated
EPCI services for upstream field developments, the Company delivers
fixed and floating production facilities, pipelines and subsea
systems from concept to commissioning. McDermott’s customers
include national and major energy companies. Operating in
approximately 20 countries across the Atlantic, Middle East and
Asia Pacific, the Company’s integrated resources include
approximately 13,500 employees and a diversified fleet of marine
vessels, fabrication facilities and engineering offices. McDermott
has served the energy industry since 1923. To learn more, please
visit McDermott’s website on the Internet at www.mcdermott.com.
Forward-Looking
Statements
In accordance with the Safe Harbor provisions of the Private
Securities Litigation Reform Act of 1995, McDermott cautions that
statements in this press release, which are forward-looking and
provide other than historical information, involve risks and
uncertainties that may impact McDermott's actual results of
operations. These forward-looking statements include statements
about backlog, to the extent backlog may be viewed as an indicator
of future revenues, and our belief that McDermott’s growth strategy
is well designed for the markets we serve. Although we believe that
the expectations reflected in those forward-looking statements are
reasonable, we can give no assurance that those expectations will
prove to have been correct. Those statements are made by using
various underlying assumptions and are subject to numerous
uncertainties and risks, including adverse changes in the markets
in which we operate or credit markets, our inability to
successfully execute on contracts in backlog, changes in project
design or schedules, changes in the scope or timing of contracts,
and contract cancellations, change orders and other modifications.
If one or more of these risks materialize, or if underlying
assumptions prove incorrect, actual results may vary materially
from those expected. For a more complete discussion of these and
other risk factors, please see McDermott's annual and quarterly
filings with the Securities and Exchange Commission, including its
annual report on Form 10-K for the year ended December 31, 2011 and
subsequent quarterly reports on Form 10-Q. This news release
reflects management's views as of the date hereof. Except to the
extent required by applicable law, McDermott undertakes no
obligation to update or revise any forward-looking statement.
McDERMOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF
INCOME
Three Months EndedJune 30, Six Months
EndedJune 30, 2012 2011 2012
2011 (In thousands, except share and per share
amounts) Revenues $ 889,248 $ 849,801 $
1,616,926 $ 1,749,041 Costs and Expenses: Cost of
operations 759,704 703,805 1,357,138 1,451,030 Selling, general and
administrative expenses 47,482 60,412 94,093 115,781 (Gain) loss on
asset disposals 29 (71 ) (197 )
(296 ) Total costs and expenses 807,215
764,146 1,451,034 1,566,515
Equity in Income (Loss) of Unconsolidated Affiliates
(2,651 ) (1,876 ) (6,334 ) 1,551
Operating Income 79,382 83,779
159,558 184,077 Other Income (Expense):
Interest income 1,585 292 3,219 741 Interest expense
-
(263 )
-
(263 )
Gain (loss) on foreign currency--net
1,256 1,372 10,697 (2,860 )
Other income (expense)--net
51 (117 ) (530 ) (1,288 ) Total
other income (expense) 2,892 1,284
13,386 (3,670 ) Income from continuing
operations before provision for income taxes and noncontrolling
interests 82,274 85,063 172,944
180,407 Provision for Income Taxes
28,345 17,237 57,088
39,816 Income from continuing operations before
noncontrolling interests 53,929 67,826
115,856 140,591 Total income from
discontinued operations, net of tax
-
3,610 3,497 5,272
Net Income 53,929 71,436 119,353
145,863
Less: Net Income Attributable to
Noncontrolling Interests
1,190 4,108 3,856
8,115 Net Income Attributable to McDermott International,
Inc. $ 52,739 $ 67,328 $ 115,497 $ 137,748
McDERMOTT INTERNATIONAL, INC.
EARNINGS PER SHARE COMPUTATION
Three Months EndedJune 30, Six Months
Ended
June 30,
2012 2011 2012 2011 (In thousands,
except share and per share amounts) Income from
continuing operations less noncontrolling interests $ 52,739 $
63,718 $ 112,000 $ 132,476 Income from discontinued operations, net
of tax
-
3,610 3,497 5,272
Net income attributable to McDermott
International, Inc.
$ 52,739 $ 67,328 $ 115,497 $ 137,748 Weighted average
common shares (basic) 235,681,213 234,573,031 235,444,733
234,207,053 Effect of dilutive securities: Stock options,
restricted stock and restricted stock units 1,779,552
2,971,643 1,951,964 2,938,073 Adjusted weighted
average common shares and assumed exercises of stock options and
vesting of stock awards (diluted) 237,460,765
237,544,674 237,396,697 237,145,126
Basic
earnings per share: Income from continuing operations less
noncontrolling interests 0.22 0.27 0.48 0.57 Income from
discontinued operations, net of tax
-
0.02 0.01 0.02 Net income attributable to McDermott International,
Inc. 0.22 0.29 0.49 0.59
Diluted earnings per share:
Income from continuing operations less noncontrolling interests
0.22 0.27 0.47 0.56 Income from discontinued operations, net of tax
-
0.02 0.01 0.02 Net income attributable to McDermott International,
Inc. 0.22 0.28 0.49 0.58
SUPPLEMENTARY DATA
Three Months EndedJune 30, Six Months
Ended
June 30,
2012 2011 2012 2011 (In
thousands) Pension expense $ 189 $ 5,435 $ 768 $ 11,588
Depreciation & amortization expense $ 22,598 $ 19,574 $ 45,874
$ 40,099 Capital expenditures $ 86,910 $ 77,696 $ 131,661 $ 141,682
Backlog
$
5,746,701
$
4,715,590
$
5,746,701
$
4,715,590
McDERMOTT INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
June 30,2012
December 31,2011
(In thousands, except share and per
share amounts)
Assets Current Assets: Cash and cash equivalents $ 644,060 $
570,854 Restricted cash and cash equivalents 24,024 21,962
Investments 48,970 109,522
Accounts receivable--trade, net
402,503 445,808
Accounts receivable--other
62,478 53,386 Contracts in progress 471,010 287,390 Deferred income
taxes 12,316 11,931 Assets held for sale
-
3,197 Other current assets 38,349 33,135
Total Current Assets 1,703,710
1,537,185 Property, Plant and Equipment 2,087,422 1,958,877
Less accumulated depreciation
(898,635
)
(857,012
)
Net Property, Plant and Equipment 1,188,787 1,101,865 Assets Held
for Sale
-
55,571 Investments 31,661 29,484 Goodwill 41,202 41,202 Investments
in Unconsolidated Affiliates 37,873 42,659 Other Assets
187,809 184,848 Total Assets $ 3,191,042
$ 2,992,814
Liabilities and Equity
Current Liabilities: Notes payable and current maturities of
long-term debt $ 14,573 $ 8,941 Accounts payable 318,743 315,514
Accrued liabilities 337,076 309,515 Advance billings on contracts
353,457 320,438 Deferred income taxes 13,195 13,187 Income taxes
payable 55,197 54,181 Total Current
Liabilities 1,092,241 1,021,776
Long-Term Debt 95,207 84,794 Self-Insurance 26,214 23,585 Pension
Liability 19,652 21,295 Other Liabilities 123,168 107,652
Commitments and Contingencies Stockholders’ Equity: Common stock,
par value $1.00 per share, authorized 400,000,000 shares; issued
243,379,604 and 242,416,424 shares at June 30, 2012 and December
31, 2011, respectively 243,380 242,416 Capital in excess of par
value 1,383,538 1,375,976 Retained earnings 354,600 239,103
Treasury stock, at cost, 7,874,779 and 7,359,983 shares at June 30,
2012 and December 31, 2011, respectively
(98,723
)
(95,827
)
Accumulated other comprehensive loss
(110,540
)
(102,030
)
Stockholders’ Equity--McDermott
International, Inc.
1,772,255 1,659,638 Noncontrolling Interests 62,305
74,074 Total Equity 1,834,560
1,733,712 Total Liabilities and Equity $ 3,191,042 $
2,992,814
McDERMOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
Six Months EndedJune 30, 2012
2011 (In thousands) Cash Flows From Operating
Activities: Net income $ 119,353 $ 145,863 Less: Income from
discontinued operations, net of tax 3,497 5,272
Income from continuing operations $ 115,856 $ 140,591
Non-cash items included in net income: Depreciation and
amortization 45,874 40,099 Equity in (income) loss of
unconsolidated affiliates 6,334 (1,551 )
Gain on asset disposals and
impairments--net
(197 ) (296 ) Provision (benefit) from deferred taxes 1,194 (11,648
) Pension costs 768 11,588 Other non-cash items 10,090 10,369
Changes in assets and liabilities, net of effects from
dispositions: Accounts receivable 36,237 (54,481 ) Net contracts in
progress and advance billings on contracts (150,712 ) (257,381 )
Accounts payable 4,074 27,589 Accrued and other current liabilities
10,145 40,505 Pension liability and accrued postretirement and
employee benefits 15,426 (42,067 ) Other assets and liabilities
(3,902 ) 24,907
Net Cash Provided By (Used In) Operating
Activities--Continuing Operations
91,187 (71,776 )
Net Cash Provided By Operating
Activities--Discontinued Operations
-
62 Total Cash Provided By (Used In) Operating
Activities 91,187 (71,714 )
Cash
Flows From Investing Activities: Purchases of property, plant
and equipment (131,661 ) (141,682 ) (Increase) decrease in
restricted cash and cash equivalents (2,062 ) 39,950 Purchases of
available-for-sale securities (66,266 ) (377,018 ) Sales and
maturities of available-for-sale securities 125,895 424,452 Other
investing activities, net (2,071 ) 303
Net Cash Used In Investing
Activities--Continuing Operations
(76,165 ) (53,995 )
Net Cash Provided By Investing
Activities--Discontinued Operations
60,671
-
Total Cash Used In Investing Activities (15,494 )
(53,995 )
Cash Flows From Financing Activities:
Increase in debt 19,033 30,745 Payment of debt (2,988 ) (4,288 )
Distributions to noncontrolling interests (15,726 )
-
Other financing activities, net (2,638 ) (2,361 )
Net Cash Provided By (Used In) Financing
Activities--Continuing Operations
(2,319 ) 24,096 Effects of exchange rate changes on
cash and cash equivalents (168 ) 45 Net increase
(decrease) in cash and cash equivalents 73,206
(101,568 ) Cash and cash equivalents at beginning of period
570,854 403,463
Cash and cash equivalents at end of
period--Continuing Operations
$ 644,060 $ 301,895
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